Deck 6: Cost Behaviour

Question 1

Which of the following costs is an example of a fixed cost?

A)Salary of plant manager
B)Sales commissions
C)Direct materials
D)Delivery costs

Answer 1

A

Question 2

The graph of a total variable cost will be a horizontal line.

Answer 2

False

Question 3

Unit variable costs change as total production increases.

Answer 3

False

Question 4

Total fixed costs change in response to changes in the volume of production.

Question 5

The variable cost per unit of activity increases as activity increases.

Question 6

Total mixed costs increase as volume increases because of the fixed cost component.

Question 7

Total mixed cost graphs intersect the y-axis at the level of fixed costs.

Question 8

When graphing total fixed costs,the fixed cost per unit is the slope of the fixed cost line.

Question 9

Mixed costs are part variable and part fixed.

Question 10

When graphing total variable costs,the cost line always begins at the origin.

Question 11

Total variable costs change in direct proportion to changes in volume.

Question 12

Mixed costs per unit decrease as volume increases because of the fixed cost component.

Question 13

The graph for total fixed costs will be a vertical line.

Question 14

Fixed costs per unit increase as production levels increase.

Question 15

The fixed cost per unit of activity varies inversely with changes in volume.

Question 16

A cost whose total amount changes in direct proportion to a change in volume is a(n)________ cost.

A)fixed
B)variable
C)mixed
D)irrelevant

Question 17

An expense such as advertising could be considered a discretionary fixed cost.

Question 18

Total mixed cost graphs slope upward,but do not begin at the origin.

Question 19

The fixed cost per unit always remains the same.

Question 20

When graphing total mixed costs,the cost line always begins at the origin.

Question 21

Which of the following statements is TRUE with respect to variable costs per unit?

A)They will decrease as production increases within the relevant range.
B)They will increase as production decreases within the relevant range.
C)They will remain the same as production levels change within the relevant range.
D)They will decrease as production decreases within the relevant range.

Question 22

Which of the following is a fixed cost?

A)Direct materials cost
B)Direct labour cost
C)Sales commissions expense
D)Straight-line depreciation expense

Question 23

Total fixed costs for Yellow Boats Inc.are $100,000.Total costs,both fixed and variable,are $500,000 if 125,000 units are produced.The total variable costs at a level of 200,000 units would be

A)$640,000.
B)$160,000
C)$800,000.
D)$312,000.

Question 24

The following chart shows three different costs: Cost A,Cost B,Cost C.For each cost,the chart shows the total cost and cost per unit at two different volumes within the same relevant range.Based on this information,identify each cost as fixed,variable or mixed.

Question 25

Total costs for Watson & Company at 100,000 units are $350,000,while total fixed costs are $150,000.The total variable costs at a level of 200,000 units would be

A)$700,000.
B)$175,000.
C)$400,000.
D)$300,000.

Question 26

The following chart shows three different costs: Cost A,Cost B,Cost C.For each cost,the chart shows the total cost and cost per unit at two different volumes within the same relevant range.Based on this information,identify each cost as fixed,variable or mixed.

Question 27

Total fixed costs for Excelsior Corporation are $600,000.Total costs,both fixed and variable,are $750,000 if 125,000 units are produced.The fixed cost per unit at 300,000 units would be

A)$6.00/unit.
B)$0.50/unit.
C)$4.80/unit.
D)$2.00/unit.

Question 28

Which of the following is a characteristic of a variable cost?

A)Variable costs fluctuate in total with production and sales.
B)Variable costs are fixed in total.
C)Variable costs do not change in total over any range.
D)Variable costs per unit change with changes in volume.

Question 29

Total fixed costs for Herman Enterprises are $200,000.Total costs,both fixed and variable,are $550,000 if 100,000 units are produced.The variable cost per unit is

A)$2.00/unit.
B)$7.50/unit.
C)$3.50/unit.
D)$5.50/unit.

Question 30

Selected financial data for Flash Corporation follows for a production level of 100,000 units:

A.Calculate the variable cost per unit.
B.If Flash Corporation makes 80,000 units,calculate the fixed cost per unit.
C.If Flash Corporation makes 150,000 units,calculate the total variable costs.
D.If Flash Corporation makes 200,000 units,calculate the total costs.

Question 31

For most businesses,annual straight line depreciation expense on the company's building is what type of cost?

A)Variable
B)Fixed
C)Mixed
D)Step

Question 32

If 125,000 units are produced,total costs are $380,000.Total fixed costs for White Sails,Inc.are $180,000.The variable cost per unit is

A)$4.48/unit.
B)$1.60/unit.
C)$3.04/unit.
D)$1.44/unit.

Question 33

Total fixed costs for Threads Company are $80,000.Total costs,both fixed and variable,are $170,000 if 125,000 units are produced.The fixed cost per unit at 100,000 units would be

A)$1.70/unit.
B)$0.90/unit.
C)$2.50/unit.
D)$0.80/unit.

Question 34

Which of the following statements describes variable costs?

A)They are fixed per unit and vary in total.
B)They are fixed in total.
C)They vary per unit of output.
D)They decrease per unit as production volume increases.

Question 35

Which of the following statements is TRUE with respect to total fixed costs?

A)They will increase as production decreases within the relevant range.
B)They will remain the same as production levels change within the relevant range.
C)They will decrease as production increases within the relevant range.
D)They will decrease as production decreases within the relevant range.

Question 36

Within the relevant range,which of the following statements is TRUE with respect to fixed costs per unit?

A)They will increase as production increases.
B)They will decrease as production decreases.
C)They will increase as production decreases.
D)They will remain the same as production levels change.

Question 37

The following chart shows three different costs: Cost A,Cost B,Cost C.
For each cost,the chart shows the total cost and cost per unit at two different volumes within the same relevant range.Based on this information,identify each cost as fixed,variable or mixed.

Question 38

The following chart shows three different costs: Cost A,Cost B,Cost C.For each cost,the chart shows the total cost and cost per unit at two different volumes within the same relevant range.Based on this information,identify each cost as fixed,variable or mixed.

Question 39

Renting a car and paying $15 per day plus $.03 per mile driven is an example of what type of cost?

A)Conversion cost
B)Fixed cost
C)Mixed cost
D)Variable cost

Question 40

Which of the following statements is TRUE with respect to total variable costs?

A)They will remain the same as production levels change within the relevant range.
B)They will decrease as production increases within the relevant range.
C)They will decrease as production decreases within the relevant range.
D)They will increase as production decreases within the relevant range.

Question 41

Which of the following would be considered a committed fixed cost?

A)Research and Development
B)Depreciation
C)Office holiday party
D)Advertising

Question 42

Which of the following cost behaviours cannot be accurately represented by a single straight line?

A)Step costs
B)Mixed costs
C)Fixed costs
D)Variable costs

Question 43

Managers often approximate curvilinear costs and step costs as mixed costs.

Question 44

Which of the following would be considered a discretionary fixed cost?

A)Property taxes and insurance
B)Depreciation
C)Employees wages
D)Advertising

Question 45

Your telephone service provider charges a fixed monthly fee of $85.00 plus $0.25 cents per call for calls within Canada and $0.90 per minute for international calls.Under this plan what is your monthly phone cost if you make 160 calls within Canada and 200 minutes of international calls?

Question 46

Total mixed costs can be expressed as y = vx,where y = total variable cost,v= variable cost per unit of activity,and x = volume of activity.

Question 47

In the equation y = vx + f,the f represents the fixed costs.

Question 48

Management has little or no control over

A)committed fixed costs.
B)discretionary fixed costs.
C)all fixed costs.
D)variable costs.

Question 49

The relevant range is the band of volume where total fixed and variable costs remain constant.

Question 50

Your telephone service provider charges a fixed monthly fee of $80.00 plus $0.10 cents per call for calls within Canada and $0.50 per minute for international calls.Under this plan what is your monthly phone cost if you make 100 calls within Canada and 45 minutes of international calls?

Question 51

In the equation y = vx + f,the x represents the volume of activity.

Question 52

Cost behaviour can be mathematically expressed using equations.

Question 53

Total variable costs can be expressed as y = vx,where y = total variable cost,v= variable cost per unit of activity,and x = volume of activity.

Question 54

Your telephone service provider charges a fixed monthly fee of $90.00 plus $0.15 cents per call for calls within Canada and $0.75 per minute for international calls.Under this plan what is your monthly phone cost if you make 150 calls within Canada and 160 minutes of international calls?

Question 55

Your Internet provider charges a fixed monthly fee of $20.00 plus $0.03 cents per on-line minute.Under this plan what is your monthly Internet fee if you are on-line for
A.3 hrs ?
B.12 hours and 40 minutes ?
C.6 hours ?

Question 56

Total mixed costs can be expressed as a combination of the variable and fixed cost equations.

Question 57

The equation for a straight line is y = vx + f.

Question 58

If production increases by 15%,how will total variable costs likely react?

A)Increase by 7.5%
B)Increase by 15%
C)Decrease by 15%
D)Remain the same

Question 59

At any given volume,average fixed costs must equal average variable costs.

Question 60

Total fixed costs can be expressed as y = vx,where y = total variable cost,v= variable cost per unit of activity,and x = volume of activity.

Question 61

In the equation: y = vx + f,what term represents the variable cost per unit of activity? (Assume x represents the volume of activity. )

A)f
B)v
C)y
D)vx

Question 62

In the equation: y = vx + f,what term represents the total cost?

A)f
B)v
C)y
D)vx

Question 63

In the equation y = $9.90x + $120,014,"x" represents

A)total fixed costs.
B)number of units produced.
C)total overhead costs.
D)total variable costs.

Question 64

In the equation y = $9.90x + $120,014

A)$120,014 are the total variable costs.
B)$120,014 are the total fixed costs.
C)$120,014 are the total costs.
D)$120,014 are the total overhead costs.

Question 65

Which of the following equations represents the total mixed cost?

A)y = vx + f
B)y = vx
C)y = f
D)y = v + f

Question 66

In the equation: y = vx + f,what term represents the total variable cost component?

A)f
B)v
C)y
D)vx

Question 67

When predicting costs at different volumes,managers should consider which of the following?

A)The relevant range of the cost
B)The type of cost behaviour
C)Neither of the above
D)Both of the above

Question 68

An equation of a line for total mixed costs is

A)y = vx - f
B)y = vx + f
C)f = vx -y
D)f = vx + y

Question 69

In the equation y = $9.90x + $120,014,"y" represents

A)total fixed costs.
B)variable costs/unit.
C)total overhead costs.
D)total variable costs.

Question 70

In the equation: y = vx + f,what term represents the fixed cost component?

A)f
B)v
C)y
D)vx

Question 71

YouCall offers a calling plan that charges $2.00 per month plus $0.05 per minute of call time.Under this plan,what is your monthly cost if you talk for a total of 100 minutes?

A)$7.00
B)$5.00
C)$3.00
D)$2.00

Question 72

The representation for fixed cost per unit of activity is

A)vx divided by v
B)vx divided by y
C)f divided by x
D)y divided by x

Question 73

The equation for total fixed costs is

A)y = vx - f
B)y = vx + f
C)y = f
D)f = vx + y

Question 74

In the equation: y = vx + f,what variable represents the volume of activity? (Assume v represents the variable cost per unit of activity. )

A)x
B)v
C)y
D)vx

Question 75

BestCalls has a special plan offer this month.There is a $4.00 per month charge each month and calls anywhere in the United States are $0.03 per minute.What would the monthly cost be if you typically talk for 500 minutes per month?

A)$11.00
B)$15.00
C)$19.00
D)$5.00

Question 76

The following graph indicates which type of cost behaviour?

A)Fixed
B)Mixed
C)Step
D)Variable

Question 77

The following graphs indicate which type of cost behaviour?

A)Curvilinear
B)Fixed
C)Step
D)Variable

Question 78

An equation of a line for all costs is

A)y = vx - f.
B)y = fx + v.
C)y = f.
D)y = vx + f

Question 79

If a company's overhead cost equation is y = $9.90x + $120,014.The "x" is

A)total overhead costs.
B)total fixed costs.
C)the cost driver in units.
D)the variable costs.

Question 80

The representation for total variable costs is

A)vx
B)vx + f
C)vx - f
D)y = vx